NEW YORK (Reuters)-Wall Street has grown from a three-day sell-off on Wednesday as comments from Federal Reserve Chairman Ben Benanke raised hopes that there could be a further boost to the economy in the U.S. If needed.
All three major U.S. stock indexes rose more than 1 percent shortly after Bernankes comments while <.vix>CBOE volatility Index, Wall Street fear gauge, fell 7.6% to 18.37. In the last three days, S & P 500 had lost about 2.3 percent on concern Europe's debt crisis.
"He was quite specific, more than he ever had been, and that excited the market. He did not say that they would exert impetus, but it is clear that they discussed the issue, and that there are options to, if necessary, "said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.
Bernanke says the House Financial Services Committee:
"The possibility remains that the recent economic weakness may prove to be more persistent than expected and that deflationary risks can reemerge, implying a need for further political support.
His comments, made on the first day of his semi-annual testimony to Congress on United States and monetary policy, came as investors were divided over whether the Fed would introduce another round of incentives to stimulate the economy, especially after the June security dismal jobs report. The Fed's "easy money" policy since 2008 is fueling stock market rally.
<.dji> Dow Jones industrial average was 146.03 points or 1.17 percent at 12, 592.91. Standard & Poor <.spx> 's 500 Index was up 16.06 points, or 22 percent, at 1, 329.70. The Nasdaq Composite Index <.ixic> was up 39.01 points, or 1 percent, at 2, 820.92.
Energy and materials stocks were the top winners. S & P energy sector index <.gspe> shot up 1.8 percent and the S & P sector materials index <.gspm> increased 1.7%.
Wall Street got an early boost from overseas data that showed China's economy, as measured by its gross domestic product, grew faster than expected during the second quarter.
But it was still cautious over developments in Europe. Moody's downgraded Ireland's debt to junk late on Tuesday and said Ireland was likely to follow Greece in need a second operation. Irish bond yields jumped to record highs.
News Corp shares jumped 6.5% to $ 16.34 after the company announced that it has withdrawn a bid of 12 billion dollars to buy 61 percent of
Electronic Arts Inc, computer game publisher, buys PopCap Games in some worth up to $ 1.3 billion that it is trying to ramp up its social and casual games-portfolio and better compete with Zynga Inc., known for Farmville, a game that is popular with Facebook fans. Shares of the Electronic Arts shed 0.3% to $ 24(10).
(Reporting by Angela Moon, editing by Jan Paschal)
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